Comments (15)

Oct 11, 2018

bump

Oct 11, 2018

Any opinions?

Oct 16, 2018

I switch between the two pretty regularly. I like variety personally and couldn't really do just one. Whenever I get burned out or bored of the deal side I switch to ops etc... But if I had to pick one...definitely ops but more strategic and less bullshit typical ops stuff.

Oct 16, 2018

I do 50/50 deals and portfolio company support. Both sides have really interesting and shitty moments. Operations can be very engaging if the circumstances allow it (re-strategizing, creating infrastructure for the management team, etc.) or super tedious (management drama, forensic accounting on bad CFO work, etc.). Likewise for cool deals you find and want to pursue vs having to write a memo for a company you don't believe in that a partner shoved to you.

All-in-all, I think the cool side of portfolio work outshines cool deals for me but that's because my end goal is to be an operator. The main drawback is that my career path is now incredibly vague and my opportunities are dependent on the relationships I nurture.

ALSO, if anyone moved from operations support to a portco or startup, HMU as I would love to hear more about your journey :)

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Funniest
Oct 16, 2018

Shitty CFOs and bad accounting practices literally make me want to blow my brains out. Was talking to a co. doing 32M a year in topline the other day and they had no books. Like...they ran the business off a 1x a year CPA tax calculation to see if they were even profitable. Fucking insane.

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Mar 14, 2019

Been there homie.
I did a consulting gig between jobs to help an airport advertising media company raise $.
Day 1:
"So which airports are your most profitable?"
"We don't know. We don't track that."
"Huh?"
"Well, we've never thought to track things like profitability on a location-by-location basis. We can get you the printouts, but no Excels. We don't use Excel. We keep things in paper."

speechless . Mental thought "aw fuck me, man, really?"

Most Helpful
Oct 16, 2018

I find it much more enjoyable doing things that help an investment perform than doing the things that help me secure the mere ownership of the investment.

The only reason I like deal execution work is that it requires or includes a thorough understanding of the drivers for success in owning that asset ... which I then get to go enact over the hold period.

It's analogous to starting the nine-course menu at 11MP ... the first dish just makes you ready for the whole three-hour experience. The first dish is amazing. If you spent three hours eating it and only it nine times though, you wouldn't have the same experience as people eating Daniel's full menu.

Let me add in a snippet from a comment I made in another thread:

APAE:

Ultimately though, the banker exits stage left when the deal closes, while for the investor, that's where the work actually begins. A banker jumps in at the end of the ownership cycle when an owner is ready to sell and acquaints himself with as much of the strategic or operational nuance that led the business to its current position, but that's the equivalent of reading someone else's study guide for a final exam as opposed to the investor who's the equivalent of the guy that wrote the study guide himself across the whole semester.

I got out of banking because I didn't want to only do deals. Being in private equity and seeing only the deal side would feel like banking all over again, with some small added benefit in increased control over timing and the power dynamic between all your counter-parties.

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Oct 17, 2018

This deals vs. support portfolio analysis seems to fit with the debt/lending side to an extent as well.. only instead of owning the asset (the company), we own the loan (which is an asset to the bank) and must continually service the loan/portfolio company thorough the life of the deal (via follow-on amendments for extensions, dividend requests, follow-on acquisitions, etc.).

People in portfolio have to 'live with the deal' that people on the 'deal side'/underwriting sign us up for.

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Oct 17, 2018

Why did I get MS...

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Oct 11, 2018

Great responses - appreciate the answers and insights.

Oct 16, 2018

Portfolio side because you get to work with a (hopefully) competent and experienced exec team to together figure out some meaningful strategic issue. They may not know the answer but they know a lot about the context and some semblance of the right questions to ask.

In contrast, on the deal side, I was at a generalist firm and always felt like I was grasping around in the dark trying to figure out a new industry myself - didn't even know how to think about which questions to ask at the beginning of many deals.

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Oct 17, 2018

Being part of the life of the invested company is exactly what distinguishes PE (and activist investment for some part) from passive investment. Instead of simply betting that your bets will pay off, the investor has to actively work on creating his own return. It's the essence of the triumph of the individual capabilities and abilities, the faber fortuna suae.

Working with the companies is where the thesis of the investment proves to be correct and if not there's room to changing and adapting to the environment - the essence of human nature. A passive investor picks some stocks on the basis of an undervaluation but after that he just stays at the window, monitoring what happens and eventually closing his position at a profit/loss. In PE you are at the centre of the stage, taking part in the play. It changes somehow the paradigm of the investment game.

I simply can't understand how this part could be less thrilling than negotiating with a seller first and a buyer then. It's the life of the business, if you don't love it, stay away from PE.

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Mar 6, 2019

I think each one reinforces the other. Very much a 1+1=3. I find portfolio company support to generally be more annoying but ultimately I want something around 50/50 because each one makes me better at the other.

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Mar 7, 2019

Honestly, I can't stand post-deal portfolio work. I find it to be very mundane, often administrative, and severely lacking in intellectual stimulation. Most operational decisions seem like complete common sense to me.

I'm much more drawn to investment thesis generation, industry research, and the weighing of the likelihood of a business being successful compared to potential returns.

This is likely a personality trait though. The incremental learning curve after DD is quite low, and I personally like to be jumping on as many learning curves as possible and churning those curves repeatedly.

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Mar 12, 2019
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